August 26th, 2022 10:45 AM by T. Fanning
Happy Friday, I hope you’ve had a good week.
Rates were mixed this week with only minor changes. Next week brings us the usual new month economic releases, including the almighty monthly Employment report. The first part of the week has little for the markets to digest, but we will have back to back days of highly important reports the latter days.*
We offer Conventional, FHA, VA, USDA, Jumbo and regular construction financing. Some of our niches include: Chenoa Fund loans; FHA and VA 1x Close Construction-Perm; 1.50% Down FHA Advantage Program; CHFA Financing; HomeStyle renovation program; and a Jumbo, 5% down program. We also can do hobby farms, Ag properties and Non-QM (stated income, verified assets for self-employed borrowers)! To see a detailed list of programs, visit our website: www.homeloanmortgageco.com/mortgageprograms
As always, please let me know if I can help you, your friends/family/potential buyers/borrowers!
Last Updated: 8/26/22
Friday's bond market has opened in negative territory, giving back some of yesterday's late gains. Stocks are showing losses of 42 points in the Dow and 51 points in the Nasdaq. The bond market is currently down 5/32 (3.05%), but strength during afternoon trading should create an improvement in this morning's mortgage rates of approximately .250 of a discount point. If you saw an intraday improvement yesterday, you may see a slight increase this morning to reflect this morning's weakness.
July's Personal Income and Outlays report was posted at 8:30 AM ET. It showed that personal income rose 0.2% last month and spending increased only 0.1%. Both readings were below forecasts, indicating consumers had less money to spend and actually spent less than thought. Consumer spending makes up over two-thirds of the U.S. economy, so the weaker than predicted readings are a sign of softer economic activity that allow us to label the report good news for mortgage rates.
The inflation index in this report that the Fed heavily relies on, core PCE, came in up 0.1% when analysts were expecting a 0.3% rise. That is very good news for bonds and mortgage rates as it signals the Fed's past rate hikes are having a positive impact on inflation. While the Fed is likely to remain aggressive with raising key short-term rates, signs of results give us optimism that we are heading in the right direction. Rising inflation makes long-term securities such as mortgage bonds less attractive to investors, causing rising yields to rise. As inflation subsides, bonds should benefit, leading to lower yields and mortgage rates in the coming months.
The final report of the week came at 10:00 AM ET with the revised University of Michigan's Index of Consumer Sentiment for August. They announced a reading of 58.2 that was higher than the initial reading of 55.1 from two weeks ago. The upward revision means surveyed consumers feel better about their own financial and employment situations than previously estimated. This is relevant because higher confidence levels usually translate into stronger consumer spending numbers that fuel economic growth. Accordingly, we should consider this report bad news for bonds and mortgage rates.
Fed Chairman Powell is speaking at the Jackson Hole conference right now. So far, he has not said anything that was a surprise. He is reiterating previous comments about the Fed's plan to bring down inflation. They would like to see the employment sector lighten up to help speed up the process and just a single month or two of favorable data doesn't mean their job is done. Again, more recycled comments and thoughts than anything new.
Next week brings us the usual new month economic releases, including the almighty monthly Employment report. The first part of the week has little for the markets to digest, but we will have back to back days of highly important reports the latter days. Look for details on all of next week's activities in Sunday evening's weekly preview.
If I were considering financing/refinancing a home, I would....
Lock if my closing were taking place within 7 days... Lock if my closing were taking place between 8 and 20 days... Lock if my closing were taking place between 21 and 60 days... Float if my closing were taking place over 60 days from now...
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.*
*https://www.homeloanmortgageco.com/DailyRateLockAdvisory
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